FedEx (FDX 0.12%) delivered an earnings beat in a tough operating environment. Investors are pleased with the results, sending FedEx shares up 8% as of 10 a.m. ET.

Improved earnings in a difficult environment

2023 was a challenging year for the shipping industry. Concerns about the economy caused large manufacturers and retailers to take a cautious approach to inventories, which ate into demand for transportation services.

In response, FedEx and other shippers have been focused on costs.

That focus paid off in the most recent quarter. FedEx posted a fiscal third-quarter profit of $3.86 per share, well ahead of Wall Street's $3.45-per-share estimate, despite revenue that at $21.7 billion was about $300 million short of expectations. The company's operating margin for the quarter was 6.2%, an improvement from 5.3% in the same period a year ago.

FedEx said its "DRIVE" cost cutting campaign will contribute $1.8 billion in annual savings in the current fiscal year, and another $2.2 billion in fiscal 2025.

"FedEx delivered another quarter of improved profitability in what remains a difficult demand environment, reflecting outstanding service and continued benefits from DRIVE," CEO Raj Subramaniam said in a statement. "I've never been more confident in our path ahead as we build a more flexible, efficient, and intelligent network."

Is FedEx a buy after its earnings beat?

Revenue is likely to remain pressured in the current quarter, but FedEx is demonstrating its ability to deliver results throughout the economic cycle. That's important, as the nature of this business means the company has to be ready for demand to ebb and flow.

FedEx offers the prospect of modest growth at a rate similar to that of the global economy, with a strong ability to return cash to investors via share repurchases and dividends. The stock offers a 1.7% yield at its current price, and the company's board just authorized a new $5 billion share buyback program.

Over the past decade, FedEx has reduced its share count by 14%.

FedEx is an attractive option for income-focused investors looking for some opportunity for upside.